Reviewed for EH.Net by Santhi Hejeebu, Department of Economics and Business, Cornell College.
Historical and developmental economists have been captivated by the interplay between institutions — from cultural values, beliefs, and norms to formal property rights and the rule of law — and economic growth. For the last three decades, researchers have blurred the traditional boundaries of economics to rigorously explore why the blessings of economic growth fall so unevenly across the world. What role did European imperialism play in this disparity? How might a nation’s history with European colonial rule shape its growth trajectory in its post-colonial era? Onto this vast intellectual canvas, Tirthankar Roy and Anand V. Swamy masterfully illustrate the evolution of legal institutions in British India from 1772 to 1947. With an eye toward evaluating the impact of this inheritance on today’s Indian economy, Roy and Swamy showcase the limits of imported institutions.

The first chapter frames “the problem”: Contemporary India’s legal infrastructure is in urgent need of reform. Today, many regard it as restrictive, cumbersome, backlogged and, according to the McKinsey Global Institute, a significant drag on economic growth. Roy and Swamy believe the system’s weaknesses originate, partly, in colonial law and legislation. They identify two hypotheses that link the economic quality of legal institutions with European colonial rule. The first conjecture, “extractive states,” correlates strong, growth-inducing institutions with mass European migration and settlement into the colony. The second hypothesis, dubbed “legal origins,” posits that economies importing British (common law) institutions would have stronger economic performance than those importing French (civil law) institutions. Both hypotheses, the authors demonstrate, fit the Indian case poorly.

The second chapter broadly narrates the evolution of British law on the subcontinent. Beginning with the period from the East India Company’s mayoral courts of the early eighteenth century to the creation of the cosmopolitan, Anglo-Indian legal codes of the late eighteenth century, the colonial codifiers’ perspective dominates the discussion of how values and norms were understood and characterized. The authors portray precolonial systems of law and justice as a “vacuum” (p. 16) in which the imperial authorities attempted to build an innovative, new system providing both access and due process to all litigants, while leaving alternative, local juridical practices in place. During the first half of the nineteenth century, this syncretic infrastructure grew in complexity. Presidency councils promulgated laws that varied with litigants’ local custom and religious practices, Parliamentary Acts (when specifying application to the colonies) remained in effect, Mughal civil and criminal courts operated in some regions, and everywhere English common law filled in the blanks. The second half of the nineteenth century witnessed a spirit of reform, a more integrated and hierarchical system of courts and legislatures, and the ascension of the idea “that lex loci could not be constructed on the foundation of Hindu or Islamic law” (p. 25).

The next six chapters focus on specific domains of law — both statutory and case law — that bear particular importance to private economic development and the fiscal health of the colonial state. These domains include land rights, property rights, labor law, contract law, and corporate law. Upon starting these sections, I marveled at the scope of the inquiry. Having dispensed with the broad hypotheses on imperial institutions and growth, could the authors make the whole cohere? How would Roy and Swamy synthesize and qualitatively evaluate colonial India’s changing legal infrastructure, given the breadth of legal domains under review, given their very long temporal horizon as well the significant variations in customary practices within the country and across industries? Each chapter corrals mature literatures and draws evidence from Victorian gazetteers, law commission reports, and case compendia. Each chapter describes how colonial legislative acts affected an area of economic relations. Throughout these chapters, contract theory often disciplines the discussion by identifying how law altered incentives between transacting parties and reconfigured the sharing of risk between them. The project is wonderfully ambitious.

In the two chapters on land, the authors, following the seminal work of the late Ratnalekha Ray, unpack the traditional land “ownership” terms of zamindari or raiyatwari. The authors deconstruct ownership as a set of use rights, or dimensions of control, over the asset. From an economic development perspective, these dimensions of control include 1) proprietorship, in other words liability for paying tax; 2) tenancy, the right to occupy land; and 3) transferability, the ability to alienate the land or use it as collateral in credit transactions. This characterization gives rise to a wider set of possible tenurial relationships than the traditional dichotomy. The discussion carefully integrates landmark legislation — the Permanent Settlement Act (1793), Bengal Tenancy Act (1885), Madras Estates Land Act (1908), Central Provinces Tenancy Act (1898), Deccan Agriculturists’ Relief Act (1879), Usurious Loans Act (1918) — and key court cases, many introduced to the literature for the first time. In each case, law recalibrated bargaining power between owners and tenants and between lenders and borrowers. In aggregate, did the Raj’s land regulations aid economic growth? The authors cautiously answer: it depends on when and where.

Chapter 5 examines the succession of property with particular emphasis on joint versus individual rights. Early British codifiers recognized that secure property rights, based on Hindu or Muslim religious codes, were already in effect. This chapter tells the story of colonial rulers unevenly incorporating Hindu and Muslim personal law into the new Anglo-Indian jurisprudence.

Chapter 6 explores labor law, beginning with the grim reality of slavery and bonded labor and delving more deeply to the case of penal contracting in the Brahmaputra and Surma Valleys. The authors maintain a clinical attitude toward penal contracting, explaining the persistence of legislation allowing such harsh labor contracts as a solution to a contractual problem. The chapter also addresses legislation aimed to regulating modern factory labor in Bombay and Bengal. The factory acts might well have created an industrial labor force, protected from internal competition, had the acts been enforced.

Chapter 7 examines contract law, the legal recognition and enforcement of privately-arranged agreements. As in earlier chapters, this one begins with the late eighteenth century exploration of a “Hindu law of contract” (p. 124) followed by the revealed inadequacy of this “artificial” legal inheritance. Prior to specific contract legislation, silk, hides, cloth and other indigenous trades flourished without resort to formal contracts through intermediaries who could exert social control along the supply chain. In the case of indigo, from roughly 1830 to 1860, the contract problems between peasant cultivators and indigo planters often devolved into coercion and oppression. According to the authors, a key legacy of the Blue Mutiny of 1860 was the Indian Contract Act of 1872. The authors doubt the Act’s contribution to economic growth, given the availability of informal and extralegal mediation and given the limited number of disputes that reference the Act.

Chapter 8 addresses laws affecting organizational forms including partnerships, the managing-agency contract, and joint stock corporate forms. Roy and Swamy describe Hindu partnerships as extensions of the Hindu joint family and governed by property and succession laws. Industrial firms in Bombay and Calcutta preferred the limited liability, joint stock organization form. Synthesizing both family partnership and the joint stock corporation was the popular, opaque, and uniquely Asian business form called the managing agency. The authors carefully analyze the shareholders’ opportunities and risks in managing agencies and the role of law in allocating rights between owners and agents. In both chapters 7 and 8, numerous legal cases effectively demonstrate the law in practice.

The final substantive section, chapter 9 provides a macro view of the evolution of law and litigation over the colonial period. The steady growth in judicial capacity, legislation, and litigation is illustrated in a series of time series graphs. The authors discover that in the early twentieth century, the majority of appellate civil suits were tried under procedural laws rather than laws pertaining to property, contract, or agency. Disputes over process gummed up the courts, a trend that has persisted to the present day. The brief conclusion notes five additional points of continuity or discontinuity between past and present.

This extraordinary synthesis of legal and historical scholarship should be read by anyone serious about the capacity and limits of law in shaping economic development. The Raj is portrayed here as improvisational, often slow and reactive, accommodating conservative impulses within India, while also embracing modernist trends from without. The recurring use of agency theory analysis and case law deliver analytical clarity and thick description. The work will be essential reading for future students of Anglo-Indian law.

While the project does a stellar job of characterizing formal institutions, the approach has its limitations. The framework largely ignores the informal economy and the multifarious, decentralized, informal systems of conflict remediation and heritable rights. To the degree that Anglo-Indian law failed to act as a centripetal force on the colonial economy, the study leaves critical institutions unnamed and unexamined. The variety of indigenous remediation systems — especially those that did not require literacy, travel to district courts, and payments to vakils — remains outside the scope of the study. It is a critical omission given that, in the study period and even seven decades after independence, the vast bulk of Indian employment remains in unorganized sectors, beyond governmental writ. As Rajalaxmi Kamath, of IIM Bangalore recently noted, the informal sector is “far from being ‘un-legislated’… [and] is very heavily regulated by social structures”[1]. A survey of such structures and their complex interactions with the legal infrastructure remains to be done. Future scholars will thank Roy and Swamy for an important point of departure.

Endnote:
1. Rajalaxmi Kamath (June 15, 2017), “India’s Informal Sector: The Vilified-glorified ‘Other’ Side of the Formal,” http://www.forbesindia.com/article/iimbangalore/indias-informal-sector-thevilifiedglorified-other-side-of-the-formal/47245/1. Retrieved July 30, 2017.
Santhi Hejeebu is Ringer Distinguished Professor of Economics and Business at Cornell College. Her recent publications include, Humanism Challenges Materialism in Economics and Economic History, Chicago: University of Chicago Press, 2017, co-edited with Roderick Floud and David Mitch.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (August 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Reviewed for EH.Net by Kenneth Pomeranz, Department of Economics, University of Chicago.

William Guanglin Liu has written a valuable book on a big, important, topic: the general trajectory of the Chinese economy from roughly 1000-1650. (The title says 1500, but the argument goes beyond that date.) The research is excellent, and the author comes up with some original and inventive ways to use his data. At times, however, it frames its arguments in overly stark forms, and makes claims that go beyond what it can prove. But despite these concerns, this is a book well worth reading, which will stimulate very useful debate on fundamental questions of Chinese economic history.

As a first approximation, Liu’s theses are hard to argue with. The author shows that China experienced very impressive growth during the Song dynasty (ca. 960-1279), a period in which there was also a striking expansion of the role of markets in Chinese society. He also show that the policies of Zhu Yuanzhang (r. 1368-1398), founder of the Ming Dynasty (1368-1644) dealt a major blow to China’s economy by trying to resurrect an idealized world of largely autarkic and demonetized villages. It took a long time for China to recover from this: in contrast to many scholars who think that by 1500 China had returned to a market economy generating at least a Song level of prosperity, Liu argues that this did not happen until at least 1600, and quite likely not even then. Moving beyond China, Liu then suggests that this historical case shows the centrality of market institutions for stimulating economic growth, beginning at a very low level of development.

The first three of these points — the marketization and relative prosperity of Song times, and the damaging effects of early Ming policies — are broadly accepted. The first controversy concerns matters of degree: how prosperous? How marketized? How big and lasting a blow did the early Ming inflict? A second set of controversies centers on causation, and thus on the role of other factors. For instance, Liu says very little about the many technological innovations during the Song — including the invention of gunpowder, the magnetic compass, paper money, and the importation (from Southeast Asia) of early-ripening rice — except to note that some of the most important innovations did not diffuse rapidly. Some others would assign those innovations (and some that began in the Tang, such as printing) a good deal of credit for the growth that occurred in the Song, and continued into the Yuan (1279-1368) in some parts of the empire. While we will never have the data necessary to arrive at a precise allocation of growth to different factors, there is still room for further productive discussion about relative weights. Likewise, it is possible to show that the Mongol conquests of the mid-thirteenth century had a devastating impact in some places (especially North China and Sichuan), and very little elsewhere (the Middle and Lower Yangzi Valley, and in the far south); the relative weight of those different regional stories is still unsettled, and matters greatly in whether Liu is justified in placing an overwhelming emphasis on early Ming anti-market policies in explaining an apparent stagnation or decline in living standards between the eleventh and sixteenth centuries.

One of the book’s contributions is to concentrate in one place the arguments for transformational change concentrated in the Song period, and followed by a later reversal: a once popular view (e.g. Elvin 1973) that has lately given way to a tale of more gradual progress across several centuries (Smith and Von Glahn 2003). Making the best of flawed data, Liu estimates population growth of 0.92% per year between 980 and 1109, a remarkable rate for a pre-modern society. And drawing on a large body of secondary scholarship, he points to considerable evidence for changes in agriculture — capital deepening, especially in the form of massive investments in irrigation, and increasing use of oxen – which should, logically, have raised agricultural yields significantly, allowing a population that had more than tripled to eat as well or better than its forebears.

Unfortunately, however, we lack much good data on actual yields in the Song. Liu notes that Dwight Perkins’ well-known estimates are (like most others for this period) inferences from agricultural rents, and that much of the land in question was land used to support schools; he further argues that school land was often rented out at below-market rates, depressing these inferred yields, and that the land which families donated to schools was often their least fertile property, anyway. Meanwhile several of Perkins’ later data points come from agricultural handbooks, and probably represent optimal results. Thus Liu argues, the impression of slow but steady growth across centuries that emerges from Perkins’ highly influential work may well be a statistical illusion. He prefers the older idea of a Song boom followed by little progress in subsequent dynasties. Building on work by Zhou Shengchan, Liu tries to work backwards from data on population and average food consumption to estimate thirteenth century yields in the Lower Yangzi region; the results vary considerably among prefectures, but are generally near the high end of our range of estimates for any period before the arrival of modern farm inputs. They would therefore leave little room for continued growth in the Yuan, Ming, or even Qing.

If verified, this would be a very important finding, but I have my doubts. In part, my doubts come from personal experience, as adopting a similar methodology for estimating eighteenth century output of various crops led to extremely high estimates.[1] There are also technical problems with some of this data (particularly in Table 7.8), though probably not big enough to change the results dramatically.[2] The most we can say with strong confidence, I think, is that some Song farmers achieved yields near the pre-modern maximum, and more and more of their neighbors caught up over time — though whether this happened over decades or centuries remains very uncertain.

For most non-food items, we simply lack the data to generate serious estimates of per capita consumption in Song times; and while anecdotal evidence of rising consumption exists, Liu prefers not to rely on it. Instead, he relies on an estimate of real wages for unskilled workers to show that living standards in the Song were as high as they ever got in China prior to the twentieth century. Because we have not found for China any very long series of wages for privately-hired workers in a relatively standardized occupation in a particular place — like the long runs of wages for construction workers on European cathedrals and colleges, for instance — Liu constructs a long-run series of military wages, for which data are comparatively rich; and because we lack data for enough commodities to construct a long-run price index, he uses grain prices as the denominator for his series. The resulting series peaks at its very beginning (in 1004) and fluctuates wildly while declining overall for the next roughly 170 years. It is then relatively stable until another steep drop in the early Ming, and recovers slightly in the late Ming before declining again in the early Qing (Figure E-1).

Liu has done us a considerable service by piecing this data series together, but as a proxy for the living standards of ordinary people it must be taken with a very large grain of salt. Governments did not engage soldiers through a true labor market, nor did the institutional setting of military recruitment or the conditions of being a soldier (aside from the wage) remain constant over time. Moreover, even if we had a reliable private sector wage series, it would not necessarily follow that this was a reliable basis for estimating popular living standards, much less per capita GDP, as Liu argues (p. 133). Wage earners were never more than 15 percent of the labor force in late imperial China, and most farmers either owned their own land or had a relatively secure tenancy (especially in Qing times). Consequently, they earned far more than unskilled laborers did — perhaps three times as much on average, according to preliminary estimates I have made for the eighteenth century (and for the early twentieth, where the data are better). (Among other things, this is confirmed by the fact that tenants and smallholders could support families, while unskilled laborers could rarely afford to marry. And for GDP per capita, we would also have to average in the earnings of well-to-do families. Last but not least, if the ratio between wages and average farm earnings changed over time — as it might well have, given a gradual strengthening of tenant usufruct rights over the course of the late empire — even a much better wage series might not tell us what we want to know about general living standards.

But if Liu does not prove his most ambitious claims, he does succeed in proving many of his smaller empirical claims. In particular, the evidence for relative prosperity in the Song and a sharp decline in the early Ming seems too much to explain away, even if one can raise doubts about each individual measurement. The money supply contracted very sharply in early Ming times, followed by the introduction of government notes (for state payments) that soon became almost worthless; customs receipts (and presumably long-distance trade declined; and the wage decline between ca. 1050 and ca. 1400 is too big to be explained entirely by data problems. A separate estimate, later in the book, suggests that per capita income in North China might have fallen by as much as half between 1121 (on the eve of the Song loss of the North) and 1420, though output per capita seems to have remained stable in the Yangzi Delta. Liu also makes a strong case that Song people were freer than their early Ming counterparts, and perhaps even less unequal economically (though Song writing shows so much worry about inequality that one is tempted to believe there was fire behind so much smoke).

This brings us to the problem of explaining these differences. Liu provides a straightforward answer: Song reliance on the market worked while the early suppression of it backfired. Moreover, this represents a timeless truth, most recently vindicated by the sharp contrast between the Maoist and post-Maoist periods. Here. I think, Liu lets his argument outrun his evidence, focusing too exclusively on one broad-brush contrast.

It would be hard to deny that the increased influence of market principles in the Song stimulated growth: above all, probably, the agricultural growth of the south, which required significant investment (especially for water management) that would surely have been more modest had earlier dynasties’ restrictions of private landowning remained in force; and given the surpluses that southern agriculture soon generate, and the relatively easy transportation that its rivers offered, impressive commercial and urban growth soon followed. Since the coastline south of the Yangzi also has far more good sites for ports than the coastline north of the Yangzi, the southward shift of China’s economic center of gravity was also propitious for foreign trade, which boomed under both the Song and the (Mongol) Yuan.

Even in the south, however, the state provided essential infrastructure (though its role declined over time), and often played a very active role in foreign trade. In the north, meanwhile, both the enormous system of canals built by the Song government and the huge concentration of demand in the capital region were crucial, both for consumer markets and the growth of a precocious iron industry stimulated by unprecedented levels of military spending. A variety of inventions also must have contributed something to the robust growth of the Song period.

Nor, I think, would many people deny that the early Ming attempt to return to local autarky had serious and lasting negative consequences. But we should bear in mind that the North, where Liu’s decline in estimated output between 1121 and 1420 was concentrated, suffered a number of major shocks in this period, all of which bypassed or fell much more lightly on the south (except for Sichuan). These included conquests by three sets of northern invaders (including, most devastatingly, the Mongols); the prolonged turmoil that toppled the Mongols and brought the Ming to power; a civil war between supporters of two Ming heirs; and repeated, enormous, Yellow River floods, including two that dramatically shifted the river’s course (out of six such incidents in the last 4,000 years) and made it impossible to rebuild the Song-era canal system. Ming policies certainly did great damage, too, but the relative size of these setbacks needs more detailed analysis before we can accept Liu’s almost exclusive emphasis on the Ming founder’s anti-market policies.

I would also caution against lumping all the parts of Ming anti-commercialism under the heading “command economy,” and comparing it to an ideal type of “market economy,” as Liu often does (e.g. pp. 1, 4-12, 134-136, 197, 199). No pre-modern state could maintain the vigorous intervention needed to run a true command economy for long. The Ming may have been more effective than most, but their massive redistribution of property and forced migration was over by about 1425, with land and labor again being exchanged in private markets;[3] the system of artisan conscription unraveled during the fifteenth century; foreign trade outside the official tribute system gradually returned; and so on. This did not mark the end of Ming anti-commercialism as an attitude, or of its effects: among other problems, the dynasty never tried to provide the money supply that the private economy needed, saddling its subjects with costs that lingered for centuries.[4] But even if this failure was originally part of an aggressive state’s attempt at command economy, it soon evolved into something else: the failure of a relatively weak state to undertake even those interventions that could have benefited both itself and the private economy. The succeeding Qing dynasty (1644-1912) certainly had no dream of a command economy, and often (though not always) sought to encourage markets; and the state’s share of GDP may have slipped as low as 2 percent, compared to at least 10 percent and perhaps as much as 20 percent at the peak of Song military-fiscalism.[5] Yet the Qing provided the most stable bronze currency — the money used for most everyday transactions — China had ever known, while uncoined silver provided a reasonably adequate currency for big transactions; and it mobilized impressive resources for various physiocratic projects, from water control to grain price stabilization to promotion of best practices in agriculture and handicrafts. (That it spent much less, proportionately, on its military than the Song or Ming had facilitated this combination of low extraction and significant services.[6]) And for about a century and a half, they presided over impressive demographic and economic growth, Interestingly, three prominent economic historians — Loren Brandt, Debin Ma, and Thomas Rawski, none of them remotely anti-market — have argued that the principal reason why Qing economic development was not even better was that the government was too minimalist: that a small government spread across a vast area was unable to prevent all sorts of local actors — from bandits to local elites employing private enforcers to rogue government clerks — from interfering with local markets and property rights.[7] Such interference was clearly a problem in the late Ming as well, though it is not precisely measurable in either period. It does, however, remind us that a simple contrast between “market economy” and “command economy” does not give us enough tools to understand the different relationships between state and market in imperial China, or anywhere else.

Nonetheless, the book does an impressive job of demonstrating how much dynamism the marketizing economy of the Song generated, and how much of those gains had been lost by the mid-Ming, at least in certain regions. The author’s efforts to quantify trends that many others have been content to describe qualitatively are impressive; this is a book where the appendices are often as thought-provoking as the text. The results are not as revolutionary or dispositive as the book sometimes suggests, but they will stimulate productive debates for years to come.

Notes:

1. Lacking data on the acreage devoted to non-grain crops in certain areas, I decided to estimate how much land must have been devoted to non-grain crops, relying on generally accepted numbers for population, grain consumption, and imports, and then multiply the acreage left over by conservative estimates of yields for the non-grain crops. The results came out so high that I cut them in every way I could think of — including, in one case, arbitrarily reducing the estimate of non-grain acreage by half. The results I came up with were still at the high end of the existing range of estimates, or in some cases significantly beyond it. I am not ready to toss out those estimates completely, and would be happy to see this approach vindicated; but I am inclined to be cautious here, especially since Liu has not made the same efforts to depress his results as I did.

2. The conversions from Zhou’s numbers, which mostly use Yuan dynasty measurements, is complicated. Trying to reproduce his results for one prefecture after an email exchange with me, Prof. Liu got a figure about 1 percent lower.

3. A rare set of household-level records, for instance, shows a family with modest landholdings in Huizhou engaged in no less than 18 land purchases or sales between 1391 (not long after the Ming came to power) and 1432. See Von Glahn 2016: 291-293.

4. Von Glahn 1996 and Kuroda 2000 suggest that this was finally addressed with moderate success in the Qing.

5. Perkins 1967: 492; Wang 1973: 133 for the Qing; Golas 1988: 93-94 comes up with 24 percent for the Song, but admits that this seems unlikely. Hartwell 1988: 79-80 suggests a bit over 10 percent.

Hartmann, Charles. 2013. “Sung Government and Politics,” in John Chafee and Dennis Twitchett, eds., The Cambridge History of China, Volume V Part 2: Sung China, 960-1279 (Cambridge: Cambridge University Press):19-133.

Hartwell, Robert. 1988. The Imperial Treasuries: Finance and Power in Song China,” Bulletin of Sung-Yuan Studies 20: 18-89

Kenneth Pomeranz is University Professor of History at the University of Chicago. His best known book is The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, 2000). His most recent publication is “The Data We Have vs. the Data We Want: A Comment on the State of the Divergence Debate,” Pt. I and Pt II New Economics Papers (June 8, 2017) https://nephist.wordpress.com/2017/06/06/the-data-we-have-vs-the-data-we-need-a-comment-on-the-state-of-the-divergence-debate-part-ii/. Forthcoming publications include “Water, Energy, and Politics: Chinese Industrial Revolutions in Global Environmental Perspective,” in Gareth Austin, ed., Economic Development and Environmental History in the Anthropocene (forthcoming, 2017: Bloomsbury Academic).

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (June 2017). All EH.Net reviews are archived at http://eh.net/book-reviews/

Subject(s):

Economic Development, Growth, and Aggregate ProductivityEconomywide Country Studies and Comparative History

Reviewed for EH.Net by Sumner La Croix, Department of Economics, University of Hawaii-Manoa.

In the past two years, there has been a boomlet in global economic histories targeted to a variety of audiences. They include a handbook oriented towards academics and graduate students (Francesco Boldizzoni and Pat Hudson, editors, Routledge Handbook of Global Economic History (2016)) and two books more oriented to undergraduates and a general audience (Robert Allen, Global Economic History: A Very Short Introduction (2015) and Larry Neal and Rondo Cameron, A Concise Economic History of the World: From Paleolithic Times to the Present, fifth edition (2015)). A new addition to this field is A History of the Global Economy, a collection of 32 essays edited by Joerg Baten (University of Tübingen), which provides a sweeping introduction to the history of the global economy from 1500. The volume was commissioned by the International Economic History Association and the editor states that his aim is to organize a “non-Eurocentric history” that presents “economic history in a balanced way.” The volume is anchored by essays on ten regions that each have “circa 500 million inhabitants today,” although it might have been useful to split the Southeast-Asia-Australia-New Zealand region into two parts given the disparate development paths of economies in Southeast Asia and Australasia. The regional essays are supplemented by “interlinking notes” that summarize critical debates among economic historians and “take a global perspective” on “core indicators” of development and growth and “highlight notes” that consider particularly interesting puzzles and topics. Senior scholars specializing in each region have written the ten anchor essays, while some of the most distinguished economic historians (e.g., Jeffrey Williamson and Steven Broadberry) were recruited to write some of the interlinking and highlight notes.

Anchor chapters are by Jan Luiten van Zanden (North-western Europe), Joerg Baten (Southern, eastern, and central Europe), Price Fishback (United States and Canada), Luis Bértola and José Antonio Ocampo (Latin America), Osamu Saito (Japan), Debin Ma (China), Rima Ghanem and Joerg Baten (Middle East, North Africa, and Central Asia), Tirthankar Roy (South Asia), Martin Shanahan (Southeast Asia and Australia/New Zealand), and Gareth Austin (Sub-Saharan Africa). Each author makes a sustained effort to incorporate four measures of the “core dimensions of development” into their analysis: Gross domestic product per capita, height as an indicator of health and the quality of nutrition, basic numeracy as an indicator of education, and the Polity IV index as an indicator of democracy. Baten argues that while these measures are not available for all regions and times, they are sufficiently available to allow the reader to compare the welfare of populations across regions over at least some of the four dimensions. The core dimensions of development are presented in each chapter via a unified set of figures and maps. Another common set of nicely-conceived maps is used to identify directions and compositions of trade flows within and across regions, centers of economic activity in each region, and specialization in production within regions.

One of the strengths of this book is that the text is kept to a manageable length of 355 pages, but this also means that some important topics receive sparse coverage. For example, the chapter on North-western Europe devotes no space to cataloging major inventions of the industrial revolution while devoting considerable space to more general interpretations of its origins. Not much space is devoted in any of the chapters to national or international macroeconomic policy. Instead the emphasis is placed on broader demographic trends, market integration and international trade, and institutional change. The chapter on Japan is lucid and informative on the 1500-1868 period, but then provides just two pages of analysis for the 1868-2010 period. This is unfortunate, as a more complete discussion of Japan’s rapid pre-World War II development, its post-war economic miracle, and subsequent stagnation over the 1990-2010 period would surely have been of great interest to many readers. The effects of war receive little attention except in the U.S./Canada essay. All that aside, some of the missing topics are filled in by the ten highlight notes and the twelve interlinking notes. Examples of topics covered by the notes include brain drain from India, the Sputnik shock, the natural resource curse in Latin America, trade and poverty in the third world, women in global economic history, Alfred Chandler’s insights into business history, state finances in civil wars, and Japanese industry during the Second World War.

In sum, Joerg Baten has brought together some of the best people in the field of economic history, and they have written a great set of essays that is surprising unified by the questions they consider as well as by the use of core indications of development and a unified set of maps and figures. The book is particularly noteworthy for its avoidance of economic jargon and its clear writing. Authors avoid extensive citation of sources in the text, keep footnotes to a minimum, and provide a brief list of references for each chapter. Students in an introductory or upper-division course in global economic history could easily digest its contents while specialists in economic history could also benefit from reading this volume, as its regional syntheses incorporate the larger literature on regional and economic growth that has emerged in the last 25 years.

Sumner La Croix is the author (with Alan Dye) of “The Political Economy of Land Privatization in Argentina and Australia, 1810-1850,” Journal of Economic History 73(4), 2013.

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Kenneth Scheve and David Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe. Princeton: Princeton University Press, 2016. xv + 266 pp. $30 (hardcover), ISBN: 978-0-691-16545-5.

Reviewed for EH.Net by Barry W. Poulson, Department of Economics, University of Colorado.

In this study Kenneth Scheve (Professor of Political Science at Stanford University) and David Stasavage (Professor of Politics at New York University) address an important question: given evidence of increasing inequality in recent years, why is there not greater effort to tax the rich? To answer this question they survey the history of progressive taxation in twenty countries over the past two centuries, and the literature on taxation and the distribution of income and wealth.

Their evidence reveals an inverted-U curve for the average top marginal rates of income taxation in these countries in the twentieth century. Using evidence for the income share going to the top 0.01 percent of the income distribution, their evidence suggests an inverse relationship between the top rate of income taxation and the share of income received by the top income group. They also find evidence of an inverted-U for average top rates of inheritance taxation in the twentieth century. Using evidence for the share of wealth owned by the top 1 percent of wealth holders, their evidence suggests an inverse relationship between the top rate of inheritance taxes and the share of wealth held by this wealthy group.

The authors maintain that higher tax rates on the rich were a form of compensatory taxation. Mass conscription during World War I and World War II imposed a heavy burden on citizens. The rich, as owners of most of the capital, captured extraordinary profits during these war years. Higher marginal tax rates on the rich compensated for this privileged position they enjoyed during the war, and the differential burdens imposed on citizens by mass conscription.

Their explanation for declining tax rates on the rich in the post-World War II period is the converse of this argument. Technological changes eliminated the requirement for massive conscription of citizens into the military. As countries relied on a voluntary army, this argument for compensatory taxation of the rich no longer held. Further, they find that other arguments for compensatory taxation of the rich based upon privilege or rent seeking are not persuasive. The authors conclude that current economic and political conditions are such that the compensatory compensation argument for taxing the rich is no longer valid. The authors agree with Thomas Piketty that taxation of the rich and income inequality in the twentieth century were linked to war; but, they do not agree that this was a random process (Piketty 2014, Piketty and Saez 2007). They argue that taxation of the rich and trends in income inequality were driven by long-run trends involving international rivalries and technologies available for waging war.

My major concern with this study is that their analysis ignores fundamental issues in this debate, especially as it relates to tax and fiscal policy in the U.S. Their analysis is based on the ‘public interest theory’ of government; the assumption is that progressive taxation satisfies a norm of fairness or equality. The public choice literature provides an alternative explanation for the differential tax burdens imposed on the rich relative to the non-rich. If the preferences of elected officials differ from those of their constituents, self-interested politicians will attempt to minimize the political costs associated with raising a given budget or revenue, where political costs result from opposition to taxes by taxpayer interest groups. Politicians can minimize these costs by shifting the tax burden to citizen groups that are less sensitive or effective in influencing tax policy. The use of a specific tax or marginal tax rate will then depend upon this tax price defined in terms of political costs. Allan Meltzer and Scott Richard use this model to show why preferences of voters for taxes are ranked by income, and how extension of the franchise could lead to higher taxation and redistribution of income from rich to poor (Meltzer and Richard 1981). (Scheve and Stasavage refer to this literature in a footnote on page 220, but argue that there is no general theory supporting the argument.)

The public choice literature reveals a systematic bias toward increased spending and deficits. From this perspective, the challenge in democratic societies is to design fiscal rules and institutions to constrain the growth of government, and to allow the preferences of citizens to dominate those of their elected representatives. Progressive tax systems are analyzed within the context of these fiscal rules and institutions (Merrifield and Poulson 2016b).

After World War II, under the leadership of the U.S., industrialized countries successfully removed barriers to international trade and capital flows. This so called “Pax Americana” set the stage for rapid growth in international trade and the global economy. To compete in this new global economy countries significantly reduced tax burdens.

As Chris Edwards and Daniel Mitchell document, the tax reforms enacted in major competitors have left the U.S. behind (Edwards and Mitchell 2008). While the U.S. retains certain tax advantages, there are a growing number of disadvantages. Its top individual income tax rate is now about average compared to other OECD countries, although it kicks in at a higher income level than most countries, and thus penalizes fewer people. However, U.S. businesses are increasingly at a competitive disadvantage with respect to tax burdens when compared to businesses in other OECD countries. The U.S. now has the second highest corporate income tax rate, at 40 percent when calculating federal and state corporate income taxes. U.S. businesses face high business tax and compliance costs. American businesses face a tax penalty when they repatriate profits earned by their foreign subsidiaries. The U.S. has the eighth highest dividend tax rate, and the highest estate and inheritance tax rate among OECD countries. Finally, the U.S. has one of the highest tax rates in the world on corporate capital gains. Much of this tax burden on business is borne by workers in the form of lower wages and employment opportunities.

In contrast, the most successful OECD countries have enacted new fiscal rules to constrain the growth in government spending. John Merrifield and I document how new fiscal rules have enabled these countries to reduce taxes and borrowing. By the end of the twentieth century Switzerland and the Scandinavian countries imposed the lowest top income tax rates compared to other OECD countries; and these countries are successfully addressing unfunded liabilities in their entitlement programs (Merrifield and Poulson 2016a).

Fiscal rules in the U.S. have been relatively ineffective in constraining the growth in federal spending. For half a century rapid growth in federal spending has been accompanied by deficits and debt accumulation. With total debt now in excess of 20 trillion dollars, the U.S. is one of the most indebted countries in the OECD. The total debt burden as a share of GDP exceeds 100 percent, and is projected to grow even higher in coming decades under current law. Growing unfunded liabilities threaten the viability of federal entitlement programs. These flaws in tax and fiscal policy are causing a massive redistribution of income and wealth in the U.S (Merrifield and Poulson 2016b).

Thomas Piketty and Emmanuel Saez. 2007. “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective,” Journal of Economic Perspectives 21: 3-24.

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Reviewed for EH.Net by Mark Harrison, Department of Economics, University of Warwick

Paying for Hitler’s War is the outcome of a conference held in Washington, DC, in 2009 under the auspices of the German Historical Institute. Its goal is a deeper understanding of the economics of German occupation during World War II. Eighteen authors, among them the editors, Jonas Scherner (Norwegian University of Science and Technology) and Eugene N. White (Rutgers University), contribute an introduction and three chapters on German war aims for the occupation of Europe and the forms and methods of exploitation of the occupied territories, followed by thirteen more chapters devoted to particular countries or regions of Europe. The latter cover countries that were occupied militarily (France, Belgium, Netherlands, Norway, Denmark, Czechoslovakia, Poland, and Ukraine), as well as neutral Sweden and belligerent Finland and Bulgaria.

As a topic for research, the economics of occupied Europe is not new (see Dallin 1957; Milward 1970, 1972; Liberman 1996; Kay 2006; and Klemann and Kudriashov 2012), but it is far from exhausted. Scherner, White, and their co-authors go beyond the existing literature in geographical detail and also in considering the impact of the wartime occupation regime or other relations with Germany on postwar developments.

Section I is entitled “Germany’s Wartime Dilemma.” The dilemma is not explicitly defined, and there are at least two candidates. One dilemma was the extent to which Germany planned to rely on external versus internal revenues — a blurry distinction, given that by 1940 Greater Germany already included Austria and parts of Poland, Czechoslovakia, and France. Another dilemma was the extent to which Germany could allow short-term confiscation and enslavement to undermine the medium-term sustainability of economic life under occupation.

Chapter 1 (Carsten Burhop) addresses an aspect of the first dilemma. To what extent did the Hitler regime base its war aims on the plans that the German government entertained in the desperate spring months of 1918, when it seemed that Allied resistance might be broken before the German home front collapsed. Did the Kaiser’s Germany inspire Hitler’s later ambitions for a system of dependent states in Eastern Europe and preferential trade with the West? Burhop argues that there is little evidence for continuity. This negative finding usefully closes off one garden path down which lazy thinkers have wandered from time to time. At the same time, here if not in some other chapter, another legacy of the Great War might have been considered: memories of the Allied blockade. In setting their immediate objectives for conquest, Hitler and his circle were strongly influenced by the recollection of Germany’s economic difficulties in World War I, which they attributed to the blocking of German imports by the Allies. Preparing for World War II, they faced the problem that their economy remained dependent on external sources of food and other materials, and they concluded that conquest would provide the means of war.

As things worked out, Germany’s wartime economic exploitation of its neighbors was of major importance for the war. German military spending reached around 70 percent of nominal national income in the later stages of the war, while net foreign saving accounted for 15 percent (Klein 1959: 256). This alone would put the likely contribution of external resources to Hitler’s war spending above 20 percent. But this is a lower bound, to which should be added the contribution of foreign labor to domestic production. Chapter 3 (Johan Custodis) estimates that by 1944 one fifth of the German workforce was made up by foreign workers, forced and “free,” who added as much as ten percent to German production.

Paying for Hitler’s War confirms some of the patterns suggested by past research. The basic extractive methods that Germany imposed were everywhere similar: if you have the power to crush all resistance and the will to use it, you don’t have to adapt sensitively to national or local differences. Chapter 2 (Scherner) shows that in every country the occupation regime imposed a direct tax (occupation costs), an indirect tax (bilateral trade using an overvalued Reichsmark), forced borrowing (unpaid clearing balances), and a labor draft. The combination of these mechanisms extracted a lot or a little, depending on a few basic conditions. Important factors included the prewar level of economic development of the territory, and the extent to which state capacity survived military defeat. In France (Chapter 4, White), Belgium (Chapter 6, Martijn Lak), and the Netherlands (Chapter 7, Kim Oosterlinck and White), the authorities under occupation were able to manage German demands by mixing fiscal and financial repression. Where the state was destroyed, as in Ukraine (Chapter 15, Kim Christian Priemel), looting was the alternative.

Other factors in the intensity of exploitation included the population’s rank in the National Socialist hierarchy of races, the extent of insurgency, and the distance from the front line. Taking everything into account, much more was extracted from Western Europe than from the East. As Chapters 3 and 4 confirm, by 1943 France was transferring more than half of its national output to Germany and at the same time France was the largest supplier of forced and POW labor to the Reich.

In more detail Chapter 3 examines the role of foreign and especially prisoner-of-war labor in the German war economy. Custodis agrees with Klemann and Kudriashov (2012) that the economic losses imposed on the occupied territories by the “hunt for labor” were much greater than the benefits to Germany. Death rates among Polish and Soviet prisoners-of-war were particularly high, depleting these countries’ postwar prospects. Much of this chapter is devoted to hunting down differences among competing estimates; the activity is useful, but could have been placed in an appendix.

This topic shows us that, while German policies were largely the same everywhere, the local experiences of interaction with Germany were almost infinitely variable. While the war continued, these variations were suppressed by the common straitjacket of occupation. When German power collapsed, the local variation exploded: suddenly, every country was different again.

Section II is entitled “The Occupied West.” Chapter 4 focuses on France. German levies were financed by a mix of fiscal and financial repression. Subject to very high rates of extraction, the French GNP collapsed as the war progressed. The end of the war did not cancel all debts, and in France as elsewhere in Europe elites and electorates had lost much of their faith in the market economy, so the exit from a war economy was complicated by the persistence of heavy taxation and financial controls. Marshall Plan Aid and the Treaty of Rome were two steps on France’s gradual path back to a free market economy.

Chapter 5 (Marcel Boldorf) shows that the German occupation of France led to a huge redistribution of rents. Collaboration with the occupation authorities was widespread in the economy, as in government and society. Most branches of the economy were devastated but war suppliers prospered. French businesses often collaborated with former competitors as well as with government, and anti-competitive business ties persisted after the war. Chapters 6 and 7 tell similar stories for Belgium and Netherlands. The wartime burden on the Belgian economy remains unclear, unlike the French burden which looks well established. The burden on the Dutch population was tempered by its “high” racial status, and also by a thriving underground economy. The Dutch postwar recovery was particularly complicated by its dependence on defeated Germany for a revival of trade.

Chapter 8 (Fabian Lemmes) considers German construction projects in France and Italy, administered by the Todt Organization. These accounted for most French and Italian wartime construction, and were implemented through a compliance system that combined rewards and penalties. Their long term consequences remain unclear.

Section III turns to “Northern Europe.” Chapter 9 (Harald Espeli) evaluates Norway’s wartime burdens. These were heavy, partly because the size of the German occupation army was very large relative to a small national population. Still, the chapter argues that war damages and losses were not as heavy as was claimed after the war. As in Western Europe, there was considerable continuity of fiscal and industrial policy into the postwar period, not all of it necessary. Chapter 11 (Steen Andersen) considers Denmark’s “mild” occupation.

Two chapters are devoted to countries that retained their sovereignty in unlikely circumstances. Chapter 10 (Eric Golson) shows that Sweden, sovereign but surrounded, had to offer incentives to both sides to uphold its neutrality. Over time, as the German threat was increasingly confined by the rise of Allied power, Swedish policy adapted flexibly in favor of the Allies. There is a contrast with Sweden, discussed in Chapter 12 (Jari Eloranta and Ilkka Nummela). Having already been attacked by the Soviet Union, Finland ended up going to war on the same side as Germany, even though with much more limited objectives, and paid a heavy price for doing so.

The most devastating outcomes of the war are discussed in Section IV, “Eastern Europe.” There, military defeat was accompanied by the collapse of states and currencies, the tearing up of national boundaries, and the implementation of plans to starve and murder tens of millions of people.

Did Nazi wartime occupation pave the way for Soviet postwar domination in Eastern Europe? Chapter 13 (Jaromír Balcar and Jaroslav Kučera) argues that in Czechoslovakia the occupation was severe but not a disaster. It did not pave the way for a command system after the war. When the governing elite chose its path towards a regulated economy, they were inspired, not forced, by Moscow. Different emphases appear in two other chapters. In Chapter 14 (Vera Asenova), wartime Bulgaria is described as locked into a protected bilateral trade relationship with Germany. When the war ended, the country moved smoothly to a similar relationship with the Soviet Union. Chapter 16 (Ramona Bräu) argues that the devastation of Poland’s physical and human capital under Nazi occupation made it much easier for the communists to impose a centralized command economy after liberation.

A common theme of this heartbreaking book is that the costs of crime to society are generally greater than the gains to the criminal. This was as true as ever when the thief was a state and the instrument was its army. Chapter 15 is soaked in sadness for Ukraine, which “had the worst of the war. Its suffering did not start in 1941 and did not end in 1944, but peaked in between, with its Jewish population suffering near annihilation” (p. 416).

This is a book for specialists. While students and interested lay readers may struggle to extract the pattern from the details, others will find that Paying for Hitler’s War marks an important new stage of scholarship about that tragic conflict.

Mark Harrison is the author of One Day We Will Live without Fear: Everyday Lives under the Soviet Police State (Hoover Institution Press, 2016).

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Historian Michael Bonner examines how the government, bureaucrats, industrial leaders and ordinary citizens interacted under the pressures of emergency wartime conditions to create a distinct Confederate political economy. The Confederate war economy dispensed with many of the normal features of a market economy just as the United States did in prosecuting the two world wars during the twentieth century.

Although the extent of the Confederate government’s economic control was unprecedented by American standards, Bonner correctly contends that the Confederate political economy was never a top-down command economy, as Louise Hill (1936) and as William Davis (1994) have contended. Bonner correctly dispatches the claim that the Confederacy adopted a “State Socialist” model. According to him, “The State Socialism argument overlooks the capitalists, both the agricultural capitalist slaveholders and the growing class of industrial capitalists, who facilitated the dramatically increased production of war materiel” (p. 222, fn. 44).

Instead, Bonner draws from Nobel-laureate Edmund Phelps’ Mass Flourishing (2013) and finds the Confederate war economy to be neither free market, nor state socialism. Bonner finds that the Confederate war economy compared more closely to the authoritarian “corporatist” economic model (aka “Fascism,” aka “crony capitalism”) adopted throughout Europe during the early-to-mid twentieth century to preserve traditional social values from dynamic capitalistic. Markets are tolerated, but subject to significant government oversight and regulation.

Confederate leaders did not intentionally set up an authoritarian regime, but the corporate model emerged out of wartime expediency. Special provisions in the new Confederate Constitution conferred additional powers to the executive branch: a six-year Presidential term, a line-item veto and executive control over government expenditures. In addition, The Confederate Supreme Court was never appointed and approved; nor did the Congress even establish federal courts for judicial review. Moreover, although Confederate congressmen and senators continued to stand for elections, wartime pressures for patriotism reduced the role of political parties and prevented gridlock. This gave President Jefferson Davis a free hand to contract with selected private firms to secure war supplies. Initially, the Confederacy lacked a bureaucracy and trained public servants so it often relied upon the assistance from states for enforcement.

The Confederate authorities had to negotiate with private interests in order to ensure reliable supplies of essential military goods. They also developed an ad hoc policy towards railroads. The Confederacy conscripted men into military service and imposed a system of wartime passes upon civilians to prevent espionage.

Bonner describes thorough narratives the corporatist interworking between the Confederate government and private manufacturers. These included the Tredegar Iron Works of Richmond and the Shelby Iron Works of Alabama, near Birmingham. Drawing largely from Charles Dew (1966), Bonner describes the rise of entrepreneur/businessman Joseph Reid Anderson, who built the Tredegar Iron Works ten years before the beginning of the war. Tredegar secured early contracts from the emerging Confederate government in February 1861 and continued to sell to both private railroads as well as the government. Bonner does a good job describing the contractual negotiations between Tredegar and government purchasing agents. Due to the onslaught of rampant inflation, the company faced rising costs and accusations of price gouging by Confederate politicians. These complaints increased and by late 1862, an army ordinance officer accused the company of yielding excessive profits of 30 to 50 percent or even as high as “60-80% in recent months” (p. 80). After 1863 the company asked five more times for price increases and the accusations of profiteering only got worse. But Tredegar was the major supplier of iron to the Confederacy and continued to obtain contracts. We may regard this process of price increases followed by accusations and new contracts as a bi-lateral negotiating process taking place during times of depreciating currency values. (Incidentally, this process was not substantially different from the union-management negotiations under periods of continuous price inflation in certain twentieth-century corporatist nations.)

Compared to Tredegar, Shelby Iron Works of Alabama was a latecomer. Largely from new primary sources, Bonner uncovers details of crony capitalism between the Shelby Company and government purchasing agents. At Shelby, prospective owners sought to expand operations, but wanted government protection from risks, so with the help of an influential Confederate purchasing agent, they secured a $75,000 loan from the Confederacy. But the private/public partnership created conflicting expectations that undermined the effectiveness of the operation. The company was supposed to repay the loan, but the government expected that the added facilities should be used to fill government orders, not private orders. The government officials feared that Shelby iron might be sold at higher prices to private buyers. The government also aided the Shelby works by exempting key employees from the draft. The major point of contention between Shelby and government was the means of payment (sound money or depreciated Confederate notes and bonds). Eventually, however, Shelby agreed to accept payment in fixed prices, with an eye to renegotiating new terms as prices increased. But in this case, Confederate officials could threaten Shelby’s labor supply by denying draft exemptions, so they may have held an advantage.

The Confederacy did embark upon a major government-run business. At the beginning of the war, the South had only four small local gunpowder mills. The Confederate government decided to create a single, large government-owned gunpowder factory at a secure location to provide its wartime requisitions. This single factory successfully supplied the Confederate armies for most of the war.

Bonner does a good job showing how Woodrow Wilson’s administration adopted the Confederate corporatist model as it mobilized the economy for participation in World War I. Although the Confederacy stumbled into cozy business-government relationships, the Wilson Administration consciously followed the same pattern. The Wilsonian World War I regime was not a top-down command-and-control system, but one that mixed government force and favors with private cooperation. Like the Confederacy, the WWI selective service relied upon the cooperation of local draft boards. Wilson’s government takeover of the railroads worked much the same way as Confederate control over rails. In both cases, the governments had to rely upon the railroad owners’ expertise giving business the upper hand in setting policy.

Bonner’s book provides a helpful addition to the study of early twentieth century Progressive economic policy. His book exploring Confederate mobilization provides a complimentary narrative to Robert Higgs’ (1987) analysis of the growth of government in Crisis and Leviathan. Bonner does not consider the role of intellectual history. Corporatism originated in Europe as the “German Historical School” and adherents taught its doctrines in American universities. Wilson adopted the theories of corporatism from his university professors (Pecquet and Thies, 2010). What Bonner shows us is that the practice of wartime mobilization also flowed out of a preexisting pattern that remained in the memories of contemporary historians.

References:

Davis, William C. 1994. A Government of Our Own: The Making of the Confederacy. New York: Free Press.

Gary M. Pecquet has published numerous articles on nineteenth and early twentieth century American economic history. The most recent of these works (with Clifford F. Thies) is “Reputation Overrides Record: How Warren G. Harding Mistakenly Became the Worst President of the United States,” The Independent Review (Summer 2016). He can be reached for comment at pecqu1g@cmich.edu.

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The surviving watermills of England are elaborately kitted out with levers, gears and a canny use of gravity. They are neatly designed to save labor, like Dutch windmills or the tools of Tokugawa Japan. It has always seemed surprising that societies able to advance so far in technique could not go further, but their sources of energy were too limited. The central thesis of Tony Wrigley’s tightly argued, supremely well documented and mostly cautious book is that theirs were organic societies, waiting, so to speak, like the whole world to be liberated by steam power.

At the heart of the volume is a cluster of seventeenth and eighteenth century developments that must in retrospect seem preparatory. During the former century transport was already being improved. Rising productivity in agriculture meant more food and farm-produced industrial inputs and had the additional effect of releasing land for other purposes. These purposes would have had to include growing more fuelwood except that substituting coal for wood as a source of heat energy (earlier than for mechanical power) was simultaneously land-saving. Meanwhile labor was released to move to London, long a sink of population whose death rate exceeded its birth rate. English marital practice, Hajnal-style, aided and abetted by the Old Poor Law, made fertility responsive to economic fluctuations. Growth potential was therefore not swamped by an unremitting rise in population. There were positive effects on consumer demand; Wrigley is much taken by Jan de Vries’s industrious revolution. These changes were linked in various and sometimes obscure ways but are set out here in an ably clarifying fashion. Into the preternaturally responsive mix came the adoption of steam as motive power. It came fast, making England the Workshop of the World. To Wrigley’s eyes, the industrial revolution was complete by 1851 but — the uptake of steam being so readily imitated — the country’s primacy did not last.

I shall shortly sum up my admiration for the volume. Before doing so, however, it is a reviewer’s task to raise doubts and hesitations. They fall into two parts. One refers to the degree of life still left in England’s “organic economy” in the first half of the nineteenth century; this is downplayed by relentless insistence on the limitations of organic economies and their dependence on plant photosynthesis. The inorganic world based on fossil fuels was bound to win in the end (though perhaps not the ultimate end, as Wrigley admits in a coda about environmental costs) but understanding the economy before steam finally took over does require detailed acknowledgement that older methods long continued. Not only did they continue but some were improved – the “sailing ship syndrome.” Historically this matters because declining sectors are still sectors, as it were. Moreover an insistence on the defects of organic economies is easily overdone, for example by quoting the Danish historian, Thorkild Kjaergaard, in saying that coal and iron saved the Europe of 1800 from “ecological disaster.” Kjaergaard himself lays heavy (though comparably over-emphatic) stress on the role of clover.

My other concern is about what might be seen as an excessively technocratic approach, the price, maybe, for clarity. Automatic responses to changing relative factor prices — inert inducement mechanisms, the Achilles’ heel of the economist — are not in the forefront of the analysis but even so the technical advances are made to emerge somewhat automatically. There is no real agency; culture and ideas scarcely figure. Inventors and entrepreneurs may have been few but they were not automata. Wrigley does not aim to delve into such matters and one might receive the impression that really he does not deign to do so. He is certainly too astute to explain each advance as “caused” by its predecessor, indeed he tackles the interactive problem head on. Yet there is no exploration beyond the (genuinely intriguing) knock-on effect of many a change, no analysis of the type of society that could respond so creatively to its practical opportunities and little more than similarly mechanistic explanations (enlightening though they are in themselves) of the failure of England’s continental rivals to do so. If an economy shifts to a new, far cheaper, source of energy it must beat the costlier prior system, ceteris paribus; at the abstract level, what more is there to say? Once steam power reigned, the effects seem obvious, but they did not arrive ex nihilo. Without showing precisely why English society at a particular period was the first to adopt the crucial inorganic changes, one might almost entertain the teasing notion that the shift was virtually a truism.

This book digests Tony Wrigley’s lifetime work, advances it and ties it together: population history, urban history, interpreting the classical economists, and above all his insistence that the greatest propulsion of all was the move to coal as a source not merely of heat energy but of mechanical energy. The author is not of the wordiness is next to godliness school, which is inherently meritorious, but the work can read a little like an accountancy manual, especially when picking its way through the complexities of occupational structure. Its value lies in cramming in an enormous mass of numerical data, much of it recently compiled, and working without fuss through complicated arguments to eliminate seeming alternatives to its own interpretations. Wrigley’s take on the emergence of the industrial revolution (more precisely the sustained growth of the title) is notably coherent and genuinely important. This is no everyday monograph but as indispensable an addition as one can find to the literature on economic history’s chief watershed.

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Subject(s):

Economic Development, Growth, and Aggregate ProductivityEconomywide Country Studies and Comparative History